Why Susie owns Starbucks: The name letter effect in security selection
AbstractWe examine whether security selection is influenced by the name letter effect--a psychological predisposition to select items that start with leading own name letters. Two sets of tests reveal evidence that the name letter effect influences investors' security selection decisions. First, breadth of ownership (as measured by the number of institutional investors holding the security) is positively related to U.S. name letter frequency, e.g., stocks that begin with the common name letter "M" exhibit a greater number of institutional shareholders than stocks that begin with the less common name letter "X." Second, undergraduate students managing university endowment funds are more likely to select securities for evaluation when the stock's name begins with the same letter as their name.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Business Research.
Volume (Year): 63 (2010)
Issue (Month): 12 (December)
Contact details of provider:
Web page: http://www.elsevier.com/locate/jbusres
Name letter effect Security selection Investor bias Role of emotions;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Merton, Robert C, 1987.
" A Simple Model of Capital Market Equilibrium with Incomplete Information,"
Journal of Finance,
American Finance Association, vol. 42(3), pages 483-510, July.
- Merton, Robert C., 1987. "A simple model of capital market equilibrium with incomplete information," Working papers 1869-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Huberman, Gur, 2001. "Familiarity Breeds Investment," Review of Financial Studies, Society for Financial Studies, vol. 14(3), pages 659-80.
- Spangenberg, Eric R. & Grohmann, Bianca & Sprott, David E., 2005. "It's beginning to smell (and sound) a lot like Christmas: the interactive effects of ambient scent and music in a retail setting," Journal of Business Research, Elsevier, vol. 58(11), pages 1583-1589, November.
- McDonald, William J., 1998. "Consumer Decision Making and Altered States of Consciousness: A Study of Dualities," Journal of Business Research, Elsevier, vol. 42(3), pages 287-294, July.
- Michael J. Cooper, 2001. "A Rose.com by Any Other Name," Journal of Finance, American Finance Association, vol. 56(6), pages 2371-2388, December.
- Babin, Barry J. & Babin, Laurie, 2001. "Seeking something different? A model of schema typicality, consumer affect, purchase intentions and perceived shopping value," Journal of Business Research, Elsevier, vol. 54(2), pages 89-96, November.
- Gustavo Grullon, 2004. "Advertising, Breadth of Ownership, and Liquidity," Review of Financial Studies, Society for Financial Studies, vol. 17(2), pages 439-461.
- Buck, Ross & Anderson, Erika & Chaudhuri, Arjun & Ray, Ipshita, 2004. "Emotion and reason in persuasion: Applying the ARI model and the CASC Scale," Journal of Business Research, Elsevier, vol. 57(6), pages 647-656, June.
- Brad M. Barber & Terrance Odean, 2008. "All That Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors," Review of Financial Studies, Society for Financial Studies, vol. 21(2), pages 785-818, April.
- Puccinelli, Nancy M. & Deshpande, Rohit & Isen, Alice M., 2007. "Should I stay or should I go? Mood congruity, self-monitoring and retail context preference," Journal of Business Research, Elsevier, vol. 60(6), pages 640-648, June.
- Krabuanrat, K. & Phelps, R., 1998. "Heuristics and rationality in strategic decision making: An exploratory study," Journal of Business Research, Elsevier, vol. 41(1), pages 83-93, January.
- C. Miguel Brendl & Amitava Chattopadhyay & Brett W. Pelham & Mauricio Carvallo, 2005. "Name Letter Branding: Valence Transfers When Product Specific Needs Are Active," Journal of Consumer Research, University of Chicago Press, vol. 32(3), pages 405-415, December.
- Chordia, Tarun & Roll, Richard & Subrahmanyam, Avanidhar, 2011. "Recent trends in trading activity and market quality," Journal of Financial Economics, Elsevier, vol. 101(2), pages 243-263, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.